HomeMy WebLinkAboutFin Proposed Budget FY2013-14Agenda Item No: 4. a
Meeting Date: June 3, 2013
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: Finance
Prepared by: Mark Moses, Interim Finance Director City Manager ApprovaiOlt
SUBJECT: REVIEW OF THE PROPOSED CITY OPERATING
BUDGET FOR FISCAL YEAR 2013-2014
RECOMMENDATION: REVIEW REPORT AND PROVIDE DIRECTION TO
STAFF TO RETURN WITH FINAL BUDGET FOR
ADOPTION
BACKGROUND:
The purpose of this report is to provide the City Council and community with an update on the
City's general fund fiscal status and a proposed operating budget for fiscal year 2013-2014.
The City Council conducted a budget workshop at a May 9, 2013, study session which covered
the status of the current year financial activity, a three-year general fund projection, and a
preliminary look at the fiscal year 2013-2014 budget. During that session, City Council
suggested that staff proceed with its recommendation to use one-time revenues (such as refunds,
non -repeating property tax distributions, and legal settlements) to address deferred maintenance
and to incorporate its best estimate for the amounts available for this and other one-time needs in
this review of the proposed operating budget.
Notwithstanding some of the actions taken by the State to resolve its budget deficits - including
the termination of redevelopment agencies and the deferral of reimbursements for expenses
associated with State mandates (now approaching $2 million for the City of San Rafael) - the
City continues to manage those issues that are in its direct control. These efforts, primarily in the
area of cost containment, have mitigated what otherwise would have been an even greater
erosion of service levels.
This report will cover the following:
1. Update on current year (fiscal 2012-2013) financial performance
2. Proposed, fiscal year 2013-2014 General Fund operating budget
3. Proposed, fiscal year 2013-2014 budgets for other City Funds
4. Next steps for adoption of fiscal year 2013-2014 budget.
FOR CITY CLERK ONLY
Council Meeting:
Disposition:
SAN RAFAEL CITY COUNCIL AGENDA REPORT { Page: 2
ANALYSIS:
UPDATED PRO.IECTI01US FOR FISCAL YEAR 2012-2013
The projections for the remainder of the current fiscal year are important for two reasons: (1)
additional revenues and unspent planned expenditures can be used to address deferred needs not
included in the current budget, and; (2) to the extent major revenues come in higher or lower
than the projected levels, the revenue projections for the subsequent year may be affected.
Because these projections are the basis for the appropriation of expenditures, it is important that
they be monitored closely.
Since the mid -year budget review, an additional $925,000 of revenues, or 1.6% of the revised
revenue budget, has been identified. Approximately half of the increase is from one-time or
limited sources, including property tax administration fee refund ($116,000), State Office of
Emergency Services reimbursements for Fire aid ($110,000), and reimbursement of retirement
benefit -related liabilities from the former redevelopment agency ($246,000). The remainder of
the increase represents third quarter adjustments to sales tax, property transfer tax, hotel tax
(TOT) and investment income. In addition, the City received a $224,750 reimbursement from
CDBG for engineering work on ADA projects, and an additional $79,770 for other grant
reimbursements. These changes provide an additional $1,229,520 in resources in the current
budget period.
Adopted
Budget as
Projected
Current
General Fund Budget
revised at
Changes
projection for
FY2012-13
Mid -Year
needs
FY2012-13
Revenues 56,120,018
57,229,261
925,000
58,154,261
Transfers In 1,485,195
1,487,421
304,520
1,791,941
Total Resources $57,605,213
$57,716,682
$1,229,520
$59,946,202
As discussed in the City Council Study Session of May 9, 2013, these resources (i.e., one-time
revenues and positive operating results) are recommended to be applied first to facilities
maintenance and repair projects that have been deferred for several years. City -owned buildings
and city -operated public facilities, parks and open space risk severe reductions in their respective
values, safety and utility if they are not properly maintained. The twelve most critical and longest
deferred projects total approximately $1.7 million. Additional amounts that become available
will be considered and recommended for (1) technology; (2) new, limited -term, operational
initiatives that do not increase ongoing costs, such as downtown beautification efforts; (3)
retirement reserve; (4) additional contributions to facilities maintenance and repair; and (5)
operating reserves.
Adopted
Budget as !
Available for
Current
I General Fund Budget
revised at
one-time
projection for
FY2012-13
Mid -Year
needs
FY2012-13
Ex enditures56,145,94156,344,047
51,229,520
$57,573,567
Staff recommends applying approximately $850,000 to the deferred maintenance projects,
$100,000 to downtown beautification, and the remainder to the other priority areas, depending
upon the final year-end results.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
FISCAL YEAR 2013-2014 GENERAL FUND BUDGET DEVELOPMENT
The proposed fiscal year 2013-2014 budget projects approximately $1.1 million in additional
resources and approximately $1.1 million in additional uses, compared to the projected results of
the current fiscal year. The projected net operating results are small in comparison to the size of
the budget, but positive.
General Fund
Projected
FY 12-13
Proposed
FY 13-14
Change from
previous
year
Change
from
previous
year
Revenues
58,154,261
59,409,363
1,255,102
2.2%
Transfers in
1,791,941
1,681,423
(110,518)
Total Resources
$59,946,202
$61,090,786
$1,144,584
1.9%
Expenditures
57,573,567
59,269,597
1,696,030
2.9%
Transfers out
2,340,439
1,800,000
(540,439)
Total Uses
$59,914,006
$61,069,597
$1,155,591
1.9%
Net Operating
$32,196
$21,189
A detailed schedule of revenues, transfers in, expenditures and transfers out for the General Fund
is attached to this report.
Revenue Factors
Although, in fiscal year 2013-2014, General Fund revenues are projected to grow by $1.3
million, or 2.2%, over those of the previous year. When the revenues of the previous year are
adjusted for one-time events, the economic growth is $2.1 million, a 3.8% year -over -year
increase.
Sales tax and the transactions and use tax (Measure "S") account for most of the increase in
revenues over the previous fiscal year. Sales tax is projected to increase by approximately $1.1
million, or 6.5%, from $17.2 million to $18.3 million. Transactions and use tax is projected to
increase by approximately $337,000, or 5.1%, from $6.6 million to $6.9 million. All other
revenues, including business tax, franchise tax, charges for services and permit fees are expected
to be flat or experience very modest increases.
Expenditure Factors
Increases in personnel costs, including the temporary addition of two positions in the police
department to support the Homeless Initiative, a provision for the reinstatement of an
engineering position to review encroachment permits and building plans, and new labor contracts
account for most of the $1.7 million, or 2.9%, growth in expenditures.
Other Factors
The General Fund continues to have some financial exposure to the activities of the Successor
Agency, which supplanted the former Redevelopment Agency as of February 1, 2012. The
General Fund could be adversely affected by decisions of the Successor Agency Oversight
SAN RAFAEL CITY COUNCIL AGENDA REPORT 1 Pate: 4
Board, the Department of Finance or the State Controller's Office with respect to allocations of
property tax increment to cover the administrative and other costs associated with the disposition
of Agency assets. Thus far, the financial impact has not been significant.
Although there is a long list of deferred facilities maintenance, unmet technology needs, and an
emergency reserve that is significantly underfunded, the City's financial condition continues to
improve as demonstrated by the following accomplishments:
1. The City is fully funding the actuarially required contribution for retiree medical benefits
and pension without the use of reserves.
2. The City has funded the Homeless Initiative Project without reducing other service
levels.
3. The City has begun to contribute one-time resources and positive operating results to
address deferred facility repair projects and other issues of safety and preservation of City
assets.
The City continues to operate at a level of staffing 15 percent below the peak in fiscal year 2007-
2008, and at the same level that existed in fiscal year 1996-1997. The erosion of staffing levels
has significantly reduced the City's organizational capacity, and leaves few resources available
to proactively manage emerging issues, or to ensure smooth and consistent continuity of
services. The management team has considered the impact of the severe restructuring on the
City's ability to effectively and sustainably deliver services upon which the residents depend.
The San Rafael Action Plan, a plan that sets forth the actions that the City will take to address
operational, fiscal, communications and quality of life issues, was presented to and accepted by
the City Council on March 18, 2013.
OTHER FUNDS
Successor Agency
Prior to the State Legislature -initiated dissolution of the Redevelopment Agency, City Council
met as the Redevelopment Agency, and approved its annual budget as part of the City-wide
budget process. Under the current legislation, the Successor Agency is not required to prepare an
annual budget. All funding of the Successor Agency follows a different process specified in the
new law: Funding must be approved by the Successor Agency's Oversight Board and the
California Department of Finance for six month periods. The economic development -related
functions of the former Redevelopment Agency have been fully transferred to the City
Manager's office.
The San Rafael Successor Agency Oversight Board has approved the minimum allowable
administrative expenses of $250,000 annually for City staff time devoted to the dissolution of the
former Redevelopment Agency.
Capital Improvement Program
The Capital Improvement Program will be covered at a future City Council meeting in a separate
report from Public Works. The new and carried -over appropriations for fiscal year 2013-2014 are
expected to equal approximately $9.6 million from special revenue, grants and other funding
sources. The chief challenges of this activity include (1) project management capacity on active
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 5
projects; (2) capital project funding shortages; (3} ensuring that grant -supported projects have
sufficient project management and matching funds to take full advantage of the grants.
Special Revenue and Grant Funds
These funds have restricted uses, based on their respective sources. Significant funds in this
group include Paramedic Tax, which as discussed at the May 20 City Council meeting, has a
balanced budget with planned expenditures of $6.2 million for the upcoming fiscal year.
Measure C, the Library parcel tax, is included in this group and is funded adequately to ensure
continuity of service levels in the next fiscal year. The purpose of the tax is to "augment the
capacity of the City of San Rafael to provide quality library services to its residents, over and
above the proportional amount of the City's general fund currently allocated to the Library...."
In fiscal year 2009-2010, the base year, the adjusted budget totaled $53,800,643 and Library was
budgeted 4.4% of that total. In the proposed fiscal year 2013-2014 budget, the library -related
expenditures, including provisions for facilities maintenance, accounts for 4.4% of the adjusted
total. Thus, the Measure C funding has not supplanted any General Fund support received by the
Library.
The Recreation and Childcare Funds, operated by Community Services are proposing spending
plans of $3.7 million and $3.8 million, respectively. Fee income covers 67% of the Recreation
budget, while fee and grant income cover 94% of the Childcare budget.
Other significant funds in this category include Gas Tax, Sewer Maintenance, Storm Water, and
Business Improvement District. These funds are adequately funded to execute their respective
spending plans for fiscal year 2013-2014.
Enterprise Fund (Parking Services)
The sole fund in this category is the Parking Services Fund. Until recently, this fund had stable
operating results, which was made possible by parking meter rates increases in 2007 combined
with cost reduction measures. Currently, fund balance is the only resource with which to cover
negative operating results and capital improvements. The parking structures and lots have
deferred maintenance issues that will need to be addressed over the next few years, in order to
preserve these revenue -generating assets. The operating and capital expenditure budgets for this
fund are $4.4 and $0.4 million, respectively. The Parking Division is preparing to bring forward
a review of rates and an assessment of capital needs during the upcoming fiscal year.
Internal Service Funds and Capital Replacement Funds
These funds are used to manage services that are delivered throughout the organization. For
example, computer replacement, employee benefits, workers compensation, general liability and
vehicle replacement are funded via internal charges to the funds that utilize these respective
services. These funds have sufficient resources to support services for fiscal year 2013-2014. The
technology internal service fund and the capital replacement funds (e.g., building maintenance,
equipment and vehicle replacement) are underfunded with respect to the City's long-term needs.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 6
CITY-WIDE FUND SUMMARY
NEXT STEPS: Staff is preparing to return to Council at the meeting of June 17, 2013 with the
following items:
1. Fiscal Year 2013-2014 City-wide Budget Adoption
2. Measure "S" Transactions and Use Tax Committee Report
3. Fiscal Year 2012-2013 Budget Adjustments
4. Capital Improvement Program
FISCAL IMPACT: The preliminary fiscal year 2013-2014 budgets are balanced for all funds.
The proposed General Fund budget does not use borrowed monies or reserves as resources with
which to fund current period operational expenditures.
RECOMMEDED ACTION: Direct staff to return on June 17, 2013 with a final citywide
budget, incorporating modifications or changes discussed at this City Council meeting.
ATTACHMENT
General Fund Proposed Budget FY 2013-2014
Projected
Sources
Uses
Projected
Fund
Balances
(Revenues
(Expenditures
Balance
July 1, 2013
and
Transfers)
and
Transfers)
June 30, 2014
General Fund
$1,351,941
$61,090,786
$61,069,597
$1,373,130
Mise Capital Project Funds
715,518
1,296,770
1,562,913
449,375
Special Revenue/Grant
26,445,815
26,777,539
27,827,847
25,395,507
Enterprise (Parking)
2,378,384
3,672,700
4,831,490
1,219,594
Internal Service /
14,764,808
11,063,846
12,799,185
13,029,469
Capital Replacement
Debt Service / Trust
513,378
148,020
198,229
463,169
Adj for ISF Charges/Transfers
(13,372,066)
(13,372,066)
City-wide Totals
$46,169,844
$90,677,595
$94,917,195
$41,930,244
NEXT STEPS: Staff is preparing to return to Council at the meeting of June 17, 2013 with the
following items:
1. Fiscal Year 2013-2014 City-wide Budget Adoption
2. Measure "S" Transactions and Use Tax Committee Report
3. Fiscal Year 2012-2013 Budget Adjustments
4. Capital Improvement Program
FISCAL IMPACT: The preliminary fiscal year 2013-2014 budgets are balanced for all funds.
The proposed General Fund budget does not use borrowed monies or reserves as resources with
which to fund current period operational expenditures.
RECOMMEDED ACTION: Direct staff to return on June 17, 2013 with a final citywide
budget, incorporating modifications or changes discussed at this City Council meeting.
ATTACHMENT
General Fund Proposed Budget FY 2013-2014
GENERALFUND
PROPOSED BUDGET FY 2013-2014
REVENUES & OTHER OPERATIONAL SOURCES
Taxes
Property Tax and related
14,219,000
Sales Tax 1 Triple Flip
18,344,000
Sales Tax -Measure S
6,937,000
Franchise Tax
3,225,000
Business Tax
2,491,000
Transient Occupancy Tax
2,060,000
Other Agencies
1,681,423
Motor Vehicle License In -Lieu Fees
-
CSA #19 Fire Service
1,553,010
VLF Backfill
4,294,998
Other Agencies (Prop 172, Owner Prop Tax, State Mandate, Other agencies)
602,000
Other Revenues
Permits & Licenses (building, electrical, encroachment, use, alarm) 1,900,000
Fine & Forfeitures (traffic, vehicle, etc,) 728,700
Interest & Rents (investment earnings, rents, etc.) 275,000
Charges for Services (includes dev't fees and plan review) 2,213,210
Other Revenue (damage reimbursements, misc income) 566_445
-----------------------------------------------------
-------------------
----------------- Sub -total: Revenues $ 59,409,363
TRANSFERSIN
from Gas Tax/Meas A Fund -206
440,000
from Paramedic/EMT Fund -210
306,841
from SRSD Sewer Maint Fund -227
265,031
from Parking Services Fund -501
393,031
from Employee Retirement Fund 4611
__ 276,520
_
Sub -total: Transfers In
1,681,423
TOTAL-OPERATIONA•URCES 4 ' i
EXPENDITURES AND OTHER OPERATIONAL USES
Expenditures by Department
Finance
1,772,761
Non -Departmental
2,353,703
City Manager/City Council
1,984,321
City Clerk
451,180
Mgt Serv: Adm,IT,HR
1,245,251
City Attorney
774,629
Community Development
3,264,466
Police
19,824,993
Fre
15,543,027
Public Works
9,543,574
Library-------------------------- -
--_
2.511.692
ures
--------------------------------- Sub------ --------- -- ----------------------
-------59------
--
TRANSFERS OUT
to ADA Projects Fund -201
50,000
to Building Improvement -603
100,000
to Childcare Fund -208
125,000
to Pickleweed Childcare Grant Fund -260
125,000
to Recreation Fund -222_
1,400,000
_ _________________________ ____________ ______________________________
Sub -total: Transfers Out
------------------------------------------------------------------------------------------------------------------------
___________________________
$
1,800,000
TOTAL OPE TtONAL USES
$
fit 06-9 _-
NET OPE TfON RESIT T -_-- --------- — ------------- --
--___
------------------------
- t,183